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Thursday, 6 November 2003
Page: 22283

Mr ANDREWS (Minister for Employment and Workplace Relations and Minister Assisting the Prime Minister for the Public Service) (9:02 AM) —I move:

That this bill be now read a second time.

This bill is a key plank in the most significant reform of the building and construction industry ever attempted. It responds to the findings and recommendations of the Royal Commission into the Building and Construction Industry, which was the most comprehensive independent investigation of the industry undertaken in Australia. At the core of the royal commission's findings about the building and construction industry is an entrenched culture of lawlessness, coupled with widespread inappropriate practices that act against choice, productivity and safety.

The royal commission found that the commercial construction industry is characterised by illegal and improper payments, chronic failure to honour legally binding agreements, regular flouting of court and commission orders and a culture of coercion and intimidation. Mr Justice Cole's report stated:

At the heart of the findings is lawlessness. It is exhibited in many ways. There are breaches of the criminal law. There are breaches of laws of general application to all Australians where the sanction is a penalty rather than possible imprisonment. There are breaches of many provisions of the Workplace Relations Act 1996 (C'wth).

The industrial setting cannot excuse such conduct, the laws of this country must apply equally to all citizens whether they be union officials, employers or workers. The royal commissioner encapsulated this imperative when he said:

Collective action, having as its purpose the defeat of the operation of the law, cannot be permitted to prevail over the will of the Australian people, expressed through the Parliament and applied through the courts. I acknowledge the rights, advantages and merits of collectivism, but where they conflict with the rule of law, the rule of law must prevail. Otherwise, there is anarchy.

The royal commission found that the building and construction industry is unique in its culture, stating:

These findings demonstrate an industry which departs from the standards of commercial and industrial conduct exhibited in the rest of the Australian economy. They mark the industry as singular. They indicate an urgent need for structural and cultural reform.

Civil, criminal and industrial laws are breached with impunity in the building and construction industry due to weaknesses in the current enforcement mechanisms. The royal commission found existing bodies ill-equipped, under-resourced and lacking in the focus necessary to bring about real and lasting cultural change. A single regulator dedicated to ensuring that industry participants comply with the law is clearly required.

Practices that would not be tolerated in other industries are widespread in the building and construction industry. The royal commission found that pattern bargaining has undermined the system of workplace-level agreement-making implemented by the Workplace Relations Act 1996. Workplace agreement making gives employers and employees genuine choice about their workplace arrangements and provides opportunities to negotiate more flexible and productive arrangements tailored to their specific needs. These opportunities are denied in the building and construction industry where instead pattern bargaining is the norm and one-size-fits-all `pattern' agreements are routinely imposed on employers and employees by unions, with no real opportunity to negotiate. Such agreements can increase costs and limit productivity growth.

Freedom of choice is a core principle underpinning the Workplace Relations Act 1996 and is a hallmark of this government's workplace relations reforms. But choice is denied to construction industry participants. Pressure is applied to contractors and subcontractors to incorporate informal industry-wide or project agreements into their workplace agreements. Employers, employees and independent contractors are subject to coercion and discrimination because of their choices about union membership and form of workplace agreement.

Another serious concern is the standard of occupational health and safety in the industry, which the royal commission found to be unacceptable. All employees, whether in the commercial construction industry or any other, have the right to expect a safe workplace. To improve occupational health and safety performance in the industry, behavioural and cultural change is necessary above all else. The Australian government, as a major client of the building and construction industry, is well positioned to drive such change.

The building and construction industry continues to perform poorly on industrial action measures. Last year the strike rate for the building and construction industry was almost seven times the strike rate for all industries combined. The industry, which constitutes around six per cent of the Australian economy, accounted for almost 40 per cent of the working days lost to industrial action.

These failures in the regulatory and compliance framework are costing us all. The building and construction industry is critical to the welfare and prosperity of the nation. Everything we buy, consume or use has a building cost component. Independent analysis by Econtech indicates that if labour productivity in the commercial construction sector matched labour productivity in the domestic housing sector, the CPI would be one per cent lower, GDP would be one per cent higher and consumers would enjoy $2.3 billion in economic benefits each year.

To unlock these economic benefits for all Australians, substantial and lasting reform is needed. That reform must be structural, cultural and directed at the specific problems of the industry. The government accepts the royal commission's assessment that this will only be achieved through industry-specific regulation.

As noted by the royal commissioner, all previous reform attempts by governments—state and federal, ALP and coalition—have failed. The Howard government has taken heed of those lessons and is proposing a comprehensive strategy that avoids the weaknesses identified by the royal commission in previous reform attempts. A structural framework appropriate to the circumstances of the industry and a permanent and dedicated enforcement agency are the keys to real and lasting reform of the building and construction industry.

Key Elements of the Bill

Compliance and Enforcement

The centrepiece of the bill's approach to improving compliance with the law in the building and construction industry is the establishment of the statutory position of the Australian Building and Construction Commissioner.

The building commissioner will head an agency charged with monitoring, investigating and prosecuting breaches of federal workplace relations laws in the industry. To secure broader compliance with the law across the industry, the building commissioner will be able to refer other matters to the relevant state or federal agency.

The building commissioner will have the power to appoint Australian building and construction inspectors to monitor compliance with the Workplace Relations Act 1996, the new building act and the Australian government's building code. The building commissioner's enforcement role will be underpinned by a stronger compliance regime with increased penalties that are more appropriate to the circumstances of the industry.

A New Regulatory Framework for the Building and Construction Industry

The Workplace Relations Act will continue to provide the basis for workplace relations regulation in the industry. The bill strengthens and in some respects extends its provisions to address the inappropriate practices identified by the royal commission.

In line with the royal commission's recommendations the bill will have a wide application through the use of a range of constitutional powers, including the corporations power, and a broad definition of `building work'. The legislation is designed to apply to the commercial construction sector and therefore largely excludes the domestic housing sector.

It is important that the bill have a wide coverage, through a broad definition of building work, so that it can effectively bring about the structural and cultural change the industry requires. Construction unions have demonstrated a willingness to target companies manufacturing products for the industry in pursuit of their industrial goals. For instance, the royal commission case study on the Saizeriya project in Victoria showed a union placing bans on the fabrication of steel products destined for the project.

The definition is therefore intended to ensure that the problems endemic in the industry are not shifted further down the contractual chain and that all those involved in the construction industry, whether on site or supplying essential materials, are covered by the enhanced regime to be introduced by the act.

Importantly, the definition of building work is able to be modified by regulations. This will ensure that minor adjustments can be made, to address any issues that may emerge from the practical operation of the act. Any non-construction related activity that is inadvertently captured will be able to excluded from the operation of the act. Similarly, it will enable the addition of other categories of building work, should the need arise.

Establishing Employment Conditions

Employment conditions in the industry will continue to be set through agreements and awards made under the Workplace Relations Act, with some additional rules applying to agreement and award-making processes.

A number of measures address the practice of pattern bargaining, which is a major cause of the excessive costs and inappropriate practices in the industry. Injunctions to stop pattern bargaining conduct will be available. Agreements will only be able to be certified if the Australian Industrial Relations Commission is satisfied that the agreement was not reached through pattern bargaining.

The bill retains the current degree of access to project agreements under the Workplace Relations Act. To prevent project agreements being used inappropriately for pattern bargaining purposes, the bill renders any new project agreements not certified under the Workplace Relations Act unenforceable.

Measures to limit pattern bargaining will be complemented by measures to promote genuine enterprise bargaining. The bill provides additional guidance to assist the Australian Industrial Relations Commission to determine whether building industry participants have genuinely tried to reach agreement. These indicators describe a range of appropriate bargaining behaviours designed to enhance the quality and efficacy of the bargaining process. The list of indicators is non-exhaustive—other behaviours and approaches may indicate that a party is genuinely trying to reach agreement. These factors in no way limit or modify Justice Munro's important ruling on whether or not a negotiating party is genuinely trying to reach agreement in the case of Australian Industry Group v. Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union.

The bill provides for further simplification of building and construction industry awards to address the potential, identified by the royal commission, for the number and scope of allowances applying in the industry to lead to confusion, disagreement and industrial disruption.

Industrial Action

Access to protected industrial action under the Workplace Relations Act will continue to be available for negotiating building certified agreements, with some modifications to address the particular problems of the industry.

There will be a maximum 14-day period for protected action followed by a mandatory 21-day cooling-off period. Further protected action will not be available unless specifically approved by the Australian Industrial Relations Commission. To attract protection, industrial action will be required to be approved democratically by a secret ballot of the employees who could take the action.

Reflecting the recommendations of the royal commission, there will be a clear delineation between lawful and unlawful industrial action—industrial action that is not for the legitimate purpose of advancing claims for a building certified agreement and is not authorised through the processes set out in the bill will be expressly unlawful.

A party taking unlawful action will be exposed to penalties and damages. There will be improved access to sanctions in the form of injunctions, pecuniary penalties and compensation for loss suffered as a consequence of unlawful action.

The bill also contains measures to prevent spurious occupational health and safety concerns being used to justify industrial action about other issues. The royal commission found that the misuse of occupational health and safety issues as an industrial tactic `cheapened' legitimate occupational health and safety concerns within the industry.

Genuine Freedom of Association

The bill will enhance freedom of association protection in the industry by introducing a series of general prohibitions dealing with the most common forms of inappropriate conduct and addressing specific gaps in the current provisions identified by the royal commission.

A range of measures will ensure that contractors operating in the industry are better protected. The bill prohibits discrimination and coercion in relation to whether or not a person has a particular form of workplace agreement or an agreement with particular terms.

Responsible Organisations

The bill enhances the regulatory framework for unions and employer organisations, with a particular focus on improving financial accountability and arrangements for union right of entry to the workplace. The royal commission considered improving compliance, with right of entry provisions to be a key reform priority.

The bill addresses the potential for concurrent federal and state regulation of right of entry to undermine the compliance regime, strengthens the requirements for obtaining a right of entry permit and significantly expands the grounds for suspension and revocation of permits. The building commissioner will play a key role in enforcing the new right of entry regime.

Leading by Example

The Australian government will use its position as a key client in the building and construction industry to provide leadership in workplace safety and other workplace relations matters and drive reform across the industry. The bill provides for the appointment of a federal safety commissioner, who will promote improved occupational health and safety standards across the industry generally and will have a specific role in relation to Australian government funded building and construction projects as the accrediting authority.

Through administration of the accreditation scheme for Commonwealth building contracts, the federal safety commissioner will test contractors' occupational health and safety credentials on the job, as well as through their management policies and systems, before they enter into contracts with the Commonwealth to carry out building work.

More broadly, the Australian government will provide leadership and drive reform through the new Australian government building code. The bill provides for a code to be issued which applies to building contractors that are constitutional corporations or to building industry participants carrying out building work in a territory or Commonwealth place. The Australian government is committed to rigorously applying the code to cover all construction projects that have Australian government funding, subject to financial thresholds. The code will be issued by the minister following consultation with a broad range of industry participants and organisations.

The building commissioner, through building inspectors, will have responsibility for monitoring compliance with the code. The federal safety commissioner will have responsibility for monitoring compliance with the occupational health and safety aspects of the code. Through the code, the Australian government will promote best practice outcomes in workplace relations and workplace safety that will raise the bar for the entire industry.


The Australian Labor Party has acknowledged the problems of the building and construction industry. Their challenge is whether they are prepared to separate themselves from the lawlessness of this industry or bow to the thuggery of well-known and vocal elements. It is a choice between acting for the benefit of all Australians, especially workers and their families, or protecting behaviour that is unlawful, harmful and costly to us all. The government has made its choice. I commend the bill to the House and present the explanatory memorandum to the bill.

Debate (on motion by Dr Emerson) adjourned.